If you’re a small business owner thinking about selling your business, you’ve probably wondered what is life changing money and what it really means for you. Is it a specific number? A lifestyle upgrade? The freedom to start your next venture? Defining what’s truly life-changing is not only a fun exercise. It’s also the key to selling your business on your terms and getting the financial results you deserve.
The problem? Most business owners dream about selling, without first understanding what they want from the sale. They risk undervaluing their business, getting stuck in negotiations, or worse, walking away with regrets.
Let’s break down a step-by-step guide to define your version of life-changing money, align it with your business exit strategy, and ensure your sale sets you up for the future you want.
Step 1: Define What Is Life Changing Money To You
When you believe mainstream media, a life-changing exit is one that is worth hundreds of millions of dollars. But for most small business owners, $5 million is life-changing. For some of our clients, it’s $600,000. Or $1 million. Sometimes, life-changing means being able to cover the expenses of your current lifestyle. For others, it’s about funding the next chapter of your life. Whether you’re planning to retire, start a new business, or take a much-needed break, understanding what you need is the first step. Don’t let attention-grabbing media stories define what a big exit means to you.
Here are a few thoughts on what life-changing could mean to you:
Be Able to Retire and Maintain Your Lifestyle:
For some business owners, life-changing money means being able to step away from work entirely while keeping their current standard of living. This includes covering everyday expenses, funding healthcare needs, and having a safety net for unexpected costs.
Be Able to Retire and Expand Your Lifestyle:
For others, selling a business is an opportunity to elevate their lifestyle. This might include buying a second home in a dream location, purchasing a yacht to sail the world, or investing in experiences they’ve always dreamed of.
Too Young to Retire, Like most of our Clients? Redefine Life-Changing:
If you’re not ready to retire, life-changing money could mean paying off your mortgage, building a financial cushion, and having the resources to pursue a new masterpiece. Imagine taking two years off to focus on your young family or backpack the world before diving into your next big idea. For inspiration, explore How 3 Women Turned An Acquisition Into A Win For Everyone
Example: Martin, who owned a thriving public speaking training business, calculated that $1.8 million would give him the financial freedom he desired. This amount covered his mortgage, funded his retirement account, and left enough to invest in his new eco-friendly startup idea.
Related stories: How SaaS Founder Melissa Kwan Went From Burnout To Breakthrough
Step 2: Understand Your Business Valuation
Knowing what life-changing money means to you, is one thing. Knowing how much your business is worth, is quite another. Knowing your current business value is critical for setting realistic expectations.
Get an Accurate Valuation:
Work with a business broker or valuation expert to assess key metrics like revenue, profitability, and market demand. Discover 3 business valuation methods for small businesses.
Identify Value Drivers:
What makes your business attractive to buyers? Recurring revenue, strong customer relationships, and low owner dependency are big pluses. Learn more about how to maximize your business’s value before selling.
Bridge the Gap:
If your business valuation doesn’t match your life-changing number, welcome to the club! It’s time to create a strategic growth plan, with the goal to increase business value. Focus on increasing profits, cutting unnecessary costs, and optimizing operations. Read this article on How To Come To Terms With A Low Business Valuation
Pro Tip: Buyers love businesses with systems. Documenting workflows, training manuals, and processes can boost your valuation significantly.
Step 3: Boost Your Sellability
A sellable business is not only a profitable business, but also one that is appealing to the right buyer. This third step is where your preparation meets opportunity when it appears.
Reduce Owner Dependency:
Can your business run without you? Hire and train a strong leadership team to show buyers they’re investing in a self-sustaining operation.
Diversify Revenue Streams:
Businesses with predictable, recurring income—like subscriptions or retainer agreements—attract higher valuations.
Tidy Up Financials:
Ensure your books are clean, accurate, and up-to-date. Nothing scares off buyers faster than financial ambiguity.
Case Study: Lisa’s boutique finance agency initially valued at $750,000 was boosted to $1.1 million after she introduced a subscription-based service model and further delegated responsibilities to her team.
What to Do After Selling Your Business
Once the sale is finalized, many business owners feel an overwhelming urge to jump into the next chapter immediately. But we advise our clients to take a step back and prioritize three things first:
Celebrate:
Selling your business is a huge milestone. Host a dinner with loved ones, take a vacation, or treat yourself to something meaningful. Recognizing your achievement helps you transition with positivity.
Relax:
After years of hard work, give yourself permission to decompress. Whether it’s spending a few weeks by the beach, hiking in nature, or simply enjoying slower mornings at home, take this time to recharge.
Journal:
Reflect on your journey—what you learned, what you’re proud of, and what’s next. Journaling can help you clarify your goals for the future and ensure that your next steps align with your values and vision. Learn more about how to avoid depression after selling your business.
By pausing to celebrate, relax, and reflect, you’ll be better equipped to make thoughtful decisions about your next move—whether it’s starting a new venture, pursuing a passion project, or simply enjoying the fruits of your labor. Just make sure you know beforehand what is life changing money to you.
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